A split has emerged among the country's major charity groups over planned welfare reforms aimed at returning the long-term unemployed back into work.

Both the Government and the Opposition have called for tougher welfare restrictions, with $13.5 billion currently spent on disability support pensions and $7.2 billion on the dole.

Prime Minister Julia Gillard says both these payments will be a key target of next month's federal budget.

Mission Australia is one of the country's leading Christian charities providing homeless shelters and employment services.

The charity has 55,000 unemployed people on its books and says it helps around 200 people a day find work.

CEO Toby Hall says the present welfare system is too soft in not penalising those who fail to comply with the job-seeking rules.

"The current system as it is has failed and we need to have a new system," he said.

"We need to look at it seriously. We need to create a system which rewards opportunity, which works with people and gives them skills they need to get into work.

"That is not about bashing people. It is actually saying we believe in people, believe in their capability and believe that they can get into the workforce.

"What we believe at the moment is that there is a number of people placed on the disability support pension and the unemployment benefit who actually aren't getting the support they need to move back to the workforce.

"And we think that we need to see a change in the situation. We need to have faith in those people that they can get work, give them the right support to get work and actually see them move back into the workforce."

As other welfare groups met in Canberra to lobby the Government to take a more positive approach in the upcoming budget, Mr Hall says there should be financial penalties if people do not meet their obligations to find a job.

"I don't think it is about people trying hard enough, I think there [are] a lot of people who are unemployed who are trying very hard to get into work and a lot of them are actually doing that successfully," he said.

"In fact we are placing around 200 people a day into work who are trying very hard, who are working hard to get into work.

"I think that is what we should be doing. We need to focus on working with those people, give them the skills they need, believe that they can get a job and work for them to ensure that they are moving towards the workforce."

'Welfare-bashing'

Mr Hall's calls for tougher eligibility requirements are not supported by some of the other charities.

St Vincent de Paul Society CEO Dr John Falzon says putting the boot into disadvantaged Australians will not get a single person into work.

"What is completely wrong-headed is to blame people, and that is why I unashamedly use the term welfare-bashing, because that's what it ends up being," he said.

"It is very fashionable, it has become a popular sport in Australia. What happens is you move people out of the frying pan and into the fire.

"Instead of investing in skills, the outcome - the big goal before the nation's eyes - becomes simply to get people off an unemployment benefit or a sole parent payment and into the workforce.

"Often the work is insecure, casual, doesn't last long, is extremely low paid and so people end up remaining in poverty - sometimes a worse form of poverty."

The Australian Council for Social Services (ACOSS) says the current restrictions for applying for benefits are onerous, with people having to apply for 10 jobs a fortnight and travel at least 90 minutes from where they live to seek work.